Attached files
| file | filename |
|---|---|
| EX-16.1 - MyStarU.com,Inc. | v206566_ex16-1.htm |
| 8-K - MyStarU.com,Inc. | v206566_8k.htm |
Subaye,
Inc. Announces Fiscal Year 2010 Adjusted EBITDA Increased 53.9%
Beijing,
China – December 23, 2010 –
|
·
|
Full
year revenues increased 46.4% to $39.1 million for 2010 as compared to
2009
|
|
·
|
Net
loss from continuing operations for 2010 totaled $7.9 million, including
$13.5 of non-cash depreciation and amortization expenses, $22.1 million in
growth-oriented marketing expenses and a one-time $6.2 million non-cash
impairment charge
|
|
·
|
Adjusted
EBITDA increased 53.9% to $34.0
million
|
|
·
|
Gross
margin increased to 78.8% from
77.5%
|
|
·
|
Cash
totaled $7.1 million as of September 30, 2010, not including $6.6 million
of cash received after yearend from sale of discontinued assets; no
debt
|
|
·
|
Pricewaterhousecoopers
has been hired as the auditor for 2011 as part of SBAY’s efforts to
address concerns raised by U.S.
investors
|
|
|
·
|
Reaffirms
FY 2011 guidance of revenue of $71.3 million and net income from
continuing operations of $29.2 million. Earnings per share for fiscal year
2011 is projected to be $3.12. Net income guidance includes
non-cash expenses totaling $12.9 million for depreciation and amortization
and amortization of stock based compensation and total growth-oriented
marketing promotions expenses for FY 2011 of $17.0
million.
|
|
|
·
|
FY
2011 Adjusted EBITDA projected to be $58.1 million,
representing a 70.9% increase over FY
2010
|
Subaye,
Inc. (NASDAQ: SBAY) (“Subaye” or the “Company”) announced its financial results
for the fiscal year ending September 30, 2010. Chairman Cai stated “ We are very
pleased with our 2010 results and the significant progress we have made in
several areas. I understand that investors will be disappointed to
see a GAAP net loss for 2010, but I will explain why I believe that figure is
not an appropriate way to assess our results or the strength of our
business. Let me first address the strategic initiatives we achieved
in Fiscal 2010. With the recently completed sale of our non-core and
lower margin businesses, we have successfully repositioned our business and are
now focused on the fast growing and high margin cloud computing and video
marketing business in China. From an investor relations perspective, we have
also taken steps that institutional investors have suggested will enable our
stock to achieve a higher valuation multiple. We recently retained
Pricewaterhousecoopers to
be our auditor for Fiscal 2011. We had no disagreement with our
current auditors but elected to change auditors because we realize U.S.
investors are increasingly focused on the quality of a company’s auditor and
many investors told us they perceived Pricewaterhousecoopers to be a stronger
auditor. We have also improved our internal reporting process so that
we can now report our quarterly and annual results early. Finally, we
have increased and improved our communication with U.S. investors as we believe
SBAY is a misunderstood company. We look forward to further improving
our investor relations in the coming year and hope that investors will begin to
understand our strong competitive position in the rapidly growing cloud
computing market in China.”
James
Crane, Chief Financial Officer, stated “Our Fiscal 2010 was very strong, but
there were several items that masked the underlying strength of our
results. Our revenues increased 46.4% to $39.1 million. Importantly,
this growth resulted from an increase in pricing and increased customers
(resulting from further penetration of existing markets and to a much lesser
extent penetration in markets we have only recently entered). On the
cost side, our results this year included a number of items that were non-cash,
non-recurring or discretionary. Our non-cash expenses included $5.9
million of depreciation and amortization as well as $7.6 million of stock based
compensation. We incurred a $6.2 million non-cash, non-recurring
impairment charge which is discussed below. We also incurred $22.1
million of growth oriented marketing expenses to help us penetrate attractive
new markets. In Q4 of last year, we made the strategic decision to
dramatically increase our marketing expenses in new markets because we wanted to
capitalize on the tremendous growth opportunities available to us. As a result,
in Q4 we incurred growth oriented marketing expenses of $14.1 million,
significantly higher than the marketing promotions we had incurred in the first
three quarters of FY 2010. Had we not elected to significantly
increase our marketing in Q4, we would have exceeded our net income guidance
(excluding the impact of the one time impairment charge). As significant
shareholders in SBAY ourselves, we did not make such a large investment without
studying these markets in detail. Ultimately, we concluded that
increasing these marketing expenses would generate a very strong return on
investment for SBAY shareholders. Unfortunately, GAAP accounting
requires us to expense the entire $22.1 million even though very little of the
money had actually been spent by our marketing agents as of September 30,
2010. In addition, as with any new marketing campaign, it typically
takes some time before new marketing results in increased revenue and
profitability. As a result, our financial results for FY 2010 reflect
significant marketing expenses for which we have yet to receive any financial
benefit. As a result of the success of our FY 2009 marketing
expenses, we are highly optimistic that these FY 2010 marketing expenses will
generate significant additional revenue and profitability next
year. Importantly, because of the fixed cost nature of our business,
the gross margin on new customers is typically higher than for existing
customers. Considering the large marketing expense in Q4, we expect
that our marketing expenses in the next two quarters will be significantly
lower. In Q1 2011 and Q2 2011 we will assess the effectiveness of the
FY 2010 increased marketing expenditures. If we see we are getting a
good return on our investment, we will consider investing in more
marketing. However, if we are not generating our anticipated return
on investment then our full year marketing expenses for FY 2011 will be
significantly less than they were in FY 2010. Considering all of the non-cash
and non-recurring items that impact our income statement, we believe a more
appropriate way of assessing Subaye’s performance, is by examining our Adjusted
EBITDA, as outlined below. As you can see, our Adjusted EBITDA and
Adjusted EBITDA margins both increased significantly.”
|
2010
|
2009
|
|||||||
|
Net
Loss From Continuing Operations Before Provision for Income Taxes and
Noncontrolling Interest
|
$ | (7,928 | ) | $ | 8,569 | |||
|
Add
Back: Depreciation and Amortization
|
5,939 | 5,405 | ||||||
|
Add
Back: Amortization of Stock Based Compensation
|
7,605 | 1,375 | ||||||
|
Add
Back: Marketing Promotion Expense
|
22,153 | 6,737 | ||||||
|
Add
Back: Impairment Loss
|
6,268 | 0 | ||||||
|
Adjusted
EBITDA
|
$ | 34,037 | $ | 22,086 | ||||
|
Adjusted
EBITDA Margin
|
87.0 | % | 82.9 | % | ||||
Chairman
Cai stated “I also wanted to update investors on the Aixi.net acquisition which
we closed on October 25, 2010. While the benefits of this acquisition are not
reflected in the results we are reporting today, we are extremely pleased with
the acquisition and its profitability is exceeding our internal
projections. We look forward to updating investors on this and other
business matter during the course of 2011.”
Recent
Growth in Customer Base
As of November 30, 2010 and October 31,
2010, we had 14,209 and 13,700 customers, respectively. As of November 30, 2010
a total of 3,123 customers were former Aixi.net customers that are now using
Subaye’s BCP.
Pending
Product Launches
On December 28, 2010, Subaye will
launch the Chinese version of its 3D online mall. On January 28, 2011, Subaye
will launch the international version of its 3D online mall.
On January 15, 2011, Subaye will launch
its Groupbuy web portal.
On February 28, 2011, Subaye will
re-launch its investor relations website.
A mobile version of Subaye’s BCP is
also in process and is expected to be launched in July 2011.
Financial
Results
Net
Revenues Increased by $12.4 million or 46.4%:
Revenues
were $39.1 million for the year ended September 30, 2010 as compared to $26.7
million for the year ended September 30, 2009. The increase of $12.4 million is
due to the significant growth in our customer base in Guangdong Province, the
expansion into new markets throughout China and as a result of a significant
increase in our average revenue per customer rate. During the year ended
September 30, 2010, we generated revenues from three products offered through
our various web properties. Revenues for Online Video, the Cloud Product and the
Bundled Cloud Product, totaled $24.8 million, $7.4 million and $6.9 million,
respectively. During the year ended September 30, 2009, we generated revenues
from two products offered through our various web properties. Revenues for
Online Video and the Cloud Product totaled $22.3 million and $4.4 million,
respectively. On September 1, 2010, we began offering the Bundled Cloud Product
to our customers. The Online Video and Cloud Product are no longer available to
our customers. The Bundled Cloud Product is the second version of our cloud
computing solution. It includes significant enhancements to the Cloud Product
and also includes the video marketing services previously marketed as Online
Video. As of September 1, 2010, we began charging our customers approximately
$410 per month for access to the Bundled Cloud Product. During the fiscal year
ending September 30, 2010 we charged our customers an average monthly fee of
$129. We have committed to a business model that will focus on generating a high
average revenue per customer rate while also further expanding our customer
base throughout China to new markets. We anticipate significant demand for CRM
products in China in the coming years and are committed to ensuring our CRM
products, namely the Bundled Cloud Product, can control a significant portion of
the CRM market within China.
Costs of
Sales Increased by $2.3 million or 38.3%:
Costs of
sales were $8.3 million for the year ended September 30, 2010, as compared to
$6.0 million for the year ended September 30, 2009. The increase of $2.3 million
is due to the issuance of stock based compensation to certain sales agents we
began using to develop business in new markets in China during 2010. A total of
$1.8 million in stock based compensation and $0.5 million in one-time cash
bonuses were issued to the sales agents and members of our internal sales and
customer service team. Amortization expense for websites and computer software
totaled $5.9 million in both 2010 and 2009, respectively.
Gross
Margin Increased by 1.3%:
Gross margin was 78.8% for the year
ended September 30, 2010 as compared to 77.5% for the year ended September 30,
2009. Gross margin increased as a result of our success in generating additional
revenues from new customers with a higher effective gross margin, approximately
81.5%. This is a result of the fact that the majority of the components of our
costs of sales consists of amortization and depreciation of websites and
software. As a result, our costs of sales should generally remain fixed from
period to period, unless we acquire additional websites, software or other items
that should be included in costs of sales.
Marketing
Promotion Expenses Increased by $15.4 million or 230.1%:
Marketing
promotion expenses were $22.1 million for the year ended September 30, 2010, as
compared to $6.7 million for the year ended September 30, 2009. During 2010, we
utilized $22.1 million for marketing promotions with our Agents in twenty two
(22) new markets in mainland China. The majority of the marketing promotion
expenses were incurred in the fourth quarter of the fiscal year ending September
30, 2010. In Q4 of FY2010 we incurred $14.1 million in marketing promotion
expenses in nineteen (19) new markets in mainland China. The marketing promotion
expenses are necessary to expense in full and immediately, in order for the
Company’s accounting to be in compliance with GAAP. However, we generally do not
expect marketing promotions to result in an immediate benefit that will be
visible as a significant increase in revenues. The marketing promotion expenses
have caused the Company to report a significant net loss from continuing
operations for the year ended September 30, 2010. We anticipate the marketing
promotion expenses incurred in 2010 will significantly increase our future
revenue and profitability in future periods. We are highly optimistic that these
marketing expenses will result in significant revenue and profitability next
year. Importantly, because of the fixed cost nature of our business,
the gross margin on new customers is typically higher than for existing
customers. Considering the large marketing expense in Q4 2010, we
expect that our marketing expenses in the next two quarters will be
significantly lower. In the middle of next year we will assess the
effectiveness of this year’s increased marketing expenditures. If we
see we were getting a good return on our investment, we will consider investing
in more marketing. However, if we are not generating our anticipated
return on investment then our full year marketing expenses for FY 2011 will be
significantly less than they were in FY 2010.
Advertising
Expenses Increased by $2.6 million or 515.2%:
Advertising
expense totaled $3.1 million for the year ended September 30, 2010, as compared
to $0.5 million for the year ended September 30, 2009. During 2010, we entered
into a localized online advertising contract with a third party for a total of
$3.0 million. During 2010 and 2009, advertising expenses associated with search
engine advertising totaled $0.1 million and $0.5 million,
respectively.
Other
General and Administrative Expenses Increased by $2.4 million or
49.0%:
General
and administrative expenses totaled $7.3 million for the year ended September
30, 2010, as compared to $4.9 million for the year ended September 30, 2009.
During 2010 and 2009, amortization of stock based compensation included in other
general and administrative expenses total $5.8 million and $1.4 million,
respectively. During 2010, a total of $0.2 million, $2.4 million, $2.2 million
and $1.0 million was expensed for stock based compensation issued to our agents,
independent third party service providers, as one-time bonuses to members of
management and for management and director compensation under certain employment
or consulting contracts. During 2010 and 2009, we paid salaries to our employees
of $0.7 million and $0.2 million, respectively. Other significant general and
administrative expenses for 2010 and 2009 included professional fees, rent
expense, among others.
Impairment
Loss Increased by $6.2 million or 100.0%:
Impairment
loss totaled $6.2 million for the year ended September 30, 2010, as compared to
$0 for the year ended September 30, 2009. During the year ended September 30,
2009, we paid deposits of $8.1 million to three manufacturers in connection with
inventory supply agreements. The inventory supply agreements were negotiated
with the intent of using high volume price discounts in order to supply our
potential online mall customers with low price inventory. The supply agreements
were renegotiated in June 2010 and approximately $1.9 million of our original
deposits were refunded to us. We are unsure if the remainder of the deposits
will ever be recovered or if inventory will ever be delivered from the
manufacturers. As a result, we have conservatively recorded a full reserve for
the balance of the deposits as of September 30, 2010.
Net Loss
From Continuing Operations Increased by $16.5 million or 191.8%:
The net
loss from continuing operations for the year ended September 30, 2010 totaled
$7.9 million. Net income for the year ended September 30, 2009 totaled $8.6
million. The net loss from continuing operations for 2010 is a result of the
significant increase in marketing promotion expenses and a non-cash,
non-recurring impairment charge.
Liquidity
As of
September 30, 2010, we had a cash balance of $7.1 million and no
debt. On November 23, 2010, we received $6.6 million of cash for the
sale of discontinued assets. Our accounts receivable are in good shape and we
have historically not had any difficulty collecting our receivables on a timely
basis.
2011
Guidance
Subaye
reaffirms guidance for fiscal year 2011 of revenue of $71.3 million and net
income from continuing operations of $29.2 million. Net income guidance includes
non-cash expenses totaling $12.9 million for depreciation and amortization and
stock based compensation as well as $17.0 in marketing promotions costs for FY
2011. FY 2011 Adjusted EBITDA is projected to be $58.1 million for FY
2011. The expected growth in 2011 will come continued growth in our existing
markets as well as contributions from new markets that we have recently
entered. Using the 9.4 million shares outstanding as of December 22,
2010, earnings per share for fiscal year 2011 would be $3.12. We do not
anticipate marketing promotion costs will be significant in the first half of
fiscal year 2011.
Business
Outlook
Subaye’s
goal for 2011 is to continue to expand aggressively into the new markets in
China where we are already active and depending upon our success in those
markets, we will enter into additional identified markets. We have committed
significant resources and spent significant capital entering these new markets.
We now have to deliver the growth that should result from our spending and the
allocation of our resources to these particular markets in general. We believe
the demand for cloud computing products potentially represents the single most
significant market opportunity of all internet-based businesses in China in the
next several years. We believe we can continue to grow at a significant pace as
a result of maintaining a high quality product offering in a product space and
geographic area that is exhibiting signs of significant growth in the years
ahead.
About
Subaye, Inc.
Subaye,
Inc. is a leading online business services provider in China engaged in
enterprise cloud computing and video marketing business solutions. Subaye’s
online business services include business to consumer (B2C) ecommerce,
emanagment solutions, emarketing solutions, eservice solutions and video search
engine optimization. For further information on Subaye, Inc., please visit
http://www.subaye.net.
Forward-Looking
Statements
Certain
statements contained herein constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on current expectations, estimates and
projections about Subaye, Inc.'s industry, management's beliefs and certain
assumptions made by management. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Because such statements involve risks and uncertainties, the actual
results and performance of the Company may differ materially from the results
expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. Subaye, Inc.'s operations are conducted in the
People's Republic of China ("PRC") and, accordingly, are subject to special
considerations and significant risks not typically associated with companies
in North America. These include risks associated with, among others, the
political, economic and legal environment and foreign currency exchange. The
Company's results may be adversely affected by changes in the political and
social conditions in the PRC and by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures, currency
conversion, remittances abroad, and rates and methods of taxation. Other
potential risks and uncertainties include but are not limited to the ability to
procure, properly price, retain and successfully complete projects, and changes
in products and competition. Unless otherwise required by law, the Company also
disclaims any obligation to update its view of any such risks or uncertainties
or to announce publicly the result of any revisions to the forward-looking
statements made here. Readers should review carefully reports or documents the
Company files periodically with the Securities and Exchange
Commission.
About
Non-GAAP Financial Measures
To
supplement our consolidated financial statements, which statements are prepared
and presented in accordance with GAAP, we use the following non-GAAP financial
measure: adjusted EBITDA. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for, or superior to,
the financial information prepared and presented in accordance with GAAP. We use
these non-GAAP financial measures for financial and operational decision making
and as a means to evaluate period-to-period comparisons. Our management believes
that these non-GAAP financial measures provide meaningful supplemental
information regarding our performance by excluding certain expenses and
expenditures that may not be indicative of our recurring core business operating
results. These non-GAAP financial measures exclude from our operating
performance not only non-cash charges, such as stock-based compensation, but
also discrete cash charges that are infrequent in nature. We believe that both
management and investors benefit from referring to these non-GAAP financial
measures in assessing our performance and when planning, forecasting and
analyzing future periods. These non-GAAP financial measures also facilitate
management's internal comparisons to our historical performance and liquidity as
well as comparisons to our competitors' operating results. We believe these
non-GAAP financial measures are useful to investors both because (1) they allow
for greater transparency with respect to key metrics used by management in its
financial and operational decision making and (2) they are used by our
institutional investors and the analyst community to help them analyze the
health of our business. The accompanying tables have more details on the GAAP
financial measures that are most directly comparable to non-GAAP financial
measures and the related reconciliations between these financial
measures.
For more
information, please contact:
Company:
James
Crane
Chief
Financial Officer
Email:
jcrane@subaye.net (Please note the new email address)
China:
+86-186-2136-3580
U.S.:
+1-617-699-6325
Investor
Relations:
Michael
Feldman
China:
+86-136-8166-7375
Hong
Kong: +852-9784-1855
Subaye,
Inc. and Subsidiaries
Consolidated
Balance Sheets
(In
Thousands Except Share and Share Data)
|
September 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
ASSETS
|
||||||||
|
Current
Assets
|
||||||||
|
Cash
|
$ | 7,120 | $ | 2 | ||||
|
Accounts
Receivable, Net of Allowance for Doubtful Accounts of $363 as of September
30, 2010 and 2009
|
9,987 | 8,266 | ||||||
|
Deposit
for Inventoriable Assets
|
- | 8,152 | ||||||
|
Other
Current Assets
|
179 | 370 | ||||||
|
Assets
of Discontinued Operations
|
6,550 | 29,360 | ||||||
|
Total
Current Assets
|
23,836 | 46,150 | ||||||
|
Caitalized
Software and Website Development Costs, Net of Accumulated Depreciation of
$19,785 and $12,863 in 2010 and 2009
|
24,268 | 10,580 | ||||||
|
Total
Assets
|
$ | 48,104 | $ | 56,730 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
Liabilities
|
||||||||
|
Accounts
Payable and Accrued Expenses
|
$ | 1,695 | $ | 566 | ||||
|
Liabilities
of Discontinued Operations
|
- | 5,275 | ||||||
|
Total
Current Liabilities and Total Liabilities
|
1,695 | 5,841 | ||||||
|
Commitments
and Contingencies
|
||||||||
|
Stockholders'
Equity
|
||||||||
|
Preferred
Stock, $0.001 Par Value; 50,000,000 Shares Authorized, None Issued and
Outstanding as of September 30, 2010 and 2009
|
- | - | ||||||
|
Common
Stock, $0.001 Par Value; Authorized 150,000,000 Shares, 7,444,931 and
2,479,243 Issued and Outstanding as of September 30, 2010 and
2009
|
7 | 3 | ||||||
|
Additional
Paid-in Capital
|
61,175 | 32,452 | ||||||
|
Deferred
Stock Based Compensation
|
(7,618 | ) | (2,908 | ) | ||||
|
Accumulated
Other Comprehensive (Loss) Income
|
(69 | ) | 54 | |||||
|
(Acumulated
Deficit) Retained Earnings
|
(7,086 | ) | 11,108 | |||||
|
Total
Stockholders' Equity Controlling Interest
|
46,409 | 40,709 | ||||||
|
Total
Stockholders' Equity Noncontrolling Interest
|
- | 10,180 | ||||||
|
Total
Stockholders' Equity
|
46,409 | 50,889 | ||||||
|
Total
Liabilities and Stockholders' Equity
|
$ | 48,104 | $ | 56,730 | ||||
See
Accompanying Notes to Consolidated Financial Statements.
F -
1
Subaye,
Inc. and Subsidiaries
Consolidated
Statements of Operations
(In
Thousands Except Per Share and Share Amounts)
|
Fiscal Year Ended September 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Net
Revenues
|
$ | 39,141 | $ | 26,651 | ||||
|
Costs
of Sales (Including Stock-Based Compensation of $1,838 and
$0)
|
8,281 | 5,957 | ||||||
|
Gross
Profit
|
30,860 | 20,694 | ||||||
|
Operating
Expenses
|
||||||||
|
Marketing
Promotions
|
22,153 | 6,737 | ||||||
|
Advertising
|
3,061 | 485 | ||||||
|
General
& Administrative (Including Stock-Based Compensation of $5,767 and
$1,375)
|
7,306 | 4,903 | ||||||
|
Total
Operating Expenses
|
32,520 | 12,125 | ||||||
|
(Loss)
Income From Continuing Operations Before Impairment Loss, Provision for
Income Taxes and Noncontrolling Interest
|
(1,660 | ) | 8,569 | |||||
|
Impairment
Loss
|
(6,268 | ) | - | |||||
|
(Loss)
Income From Continuing Operations Before Provision for Income Taxes and
Noncontrolling Interest
|
(7,928 | ) | 8,569 | |||||
|
Provision
for Income Taxes
|
- | - | ||||||
|
(Loss)
Income From Continuing Operations Before Noncontrolling
Interest
|
(7,928 | ) | 8,569 | |||||
|
(Loss)
Income From Discontinued Operations
|
(9,794 | ) | 4,251 | |||||
|
Net
(Loss) Income
|
(17,722 | ) | 12,820 | |||||
|
Net
Income Attributable to the Noncontrolling Interest
|
(472 | ) | (3,042 | ) | ||||
|
Net
(Loss) Income Attributable to Subaye, Inc.
|
$ | (18,194 | ) | $ | 9,778 | |||
|
(Loss)
Earnings Per Share - Basic and Diluted:
|
||||||||
|
Basic
Net (Loss) Income Per Share Attributable to Subaye, Inc. Common
Shareholders
|
||||||||
|
Continuing
Operations
|
$ | (1.17 | ) | $ | 3.01 | |||
|
Discontinued
Operations
|
(1.44 | ) | 2.32 | |||||
|
Total
|
$ | (2.61 | ) | $ | 5.33 | |||
|
Diluted
Net (Loss) Income Per Share Attributable to Subaye, Inc. Common
Shareholders
|
||||||||
|
Continuing
Operations
|
$ | (1.17 | ) | $ | 3.01 | |||
|
Discontinued
Operations
|
(1.44 | ) | 2.31 | |||||
|
Total
|
$ | (2.61 | ) | $ | 5.32 | |||
|
Number
of Common Shares Used to Compute Net (Loss) Income Per
Share
|
||||||||
|
Basic
|
6,783,890 | 1,836,217 | ||||||
|
Diluted
|
6,783,890 | 1,839,230 | ||||||
|
Comprehensive
Income:
|
||||||||
|
Net
(Loss) Income
|
$ | (17,722 | ) | $ | 12,820 | |||
|
Foreign
Currency Translation Adjustment, Net of Tax
|
(123 | ) | 24 | |||||
|
Comprehensive
Income
|
(17,845 | ) | 12,844 | |||||
|
Comprehensive
Income Attributable to the Noncontrolling Interest
|
(476 | ) | (3,035 | ) | ||||
|
Comprehensive
Income Attributable to Subaye, Inc.
|
$ | (18,321 | ) | $ | 9,809 | |||
See
Accompanying Notes to Consolidated Financial Statements.
F -
2
Consolidated
Statements of Stockholders' Equity
As
of September 30, 2010
(In
Thousands Except Share Amounts)
|
Common Stock, $0.001
|
||||||||||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Deferred
Stock Based
Compensation
|
Accumulated
Other Compre-
hensive (Loss)
Income
|
(Accumulated
Deficit)
Retained
Earnings
|
Total
Stockholders'
Equity
Controlling
Interest
|
Total
Stockholders'
Equity
Noncontrolling
Interest
|
Total
Stockholders'
Equity
|
||||||||||||||||||||||||||||
|
Balance,
September 30, 2008
|
1,560,143 | $ | 2 | $ | 24,456 | $ | (1,285 | ) | $ | 30 | $ | 1,330 | $ | 24,533 | $ | 7,138 | $ | 31,671 | ||||||||||||||||||
|
Issuance
of Stock for Cash
|
680,600 | 1 | 4,998 | - | - | - | 4,999 | - | 4,999 | |||||||||||||||||||||||||||
|
Issuance
of Stock for Services
|
238,500 | - | 2,998 | (2,998 | ) | - | - | - | - | - | ||||||||||||||||||||||||||
|
Amortization
of Stock-Based Compensation
|
- | - | - | 1,375 | - | - | 1,375 | - | 1,375 | |||||||||||||||||||||||||||
|
Foreign
Currency Translation
|
- | - | - | - | 24 | - | 24 | - | 24 | |||||||||||||||||||||||||||
|
Net
Income
|
- | - | - | - | - | 9,778 | 9,778 | 3,042 | 12,820 | |||||||||||||||||||||||||||
|
Balance,
September 30, 2009
|
2,479,243 | 3 | 32,452 | (2,908 | ) | 54 | 11,108 | 40,709 | 10,180 | 50,889 | ||||||||||||||||||||||||||
|
Issuance
of Stock for Cash
|
100,000 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
|
Issuance
of Stock for Services
|
976,800 | 1 | 12,314 | (12,315 | ) | - | - | - | - | - | ||||||||||||||||||||||||||
|
Issuance
of Stock for Acquisition of Minority Interests in
Subsidiary
|
3,408,888 | 3 | 10,649 | - | - | - | 10,652 | (10,652 | ) | - | ||||||||||||||||||||||||||
|
Issuance
of Stock for Acquisition of Websites
|
480,000 | - | 5,760 | - | - | - | 5,760 | - | 5,760 | |||||||||||||||||||||||||||
|
Amortization
of Stock-Based Compensation
|
- | - | - | 7,605 | - | - | 7,605 | - | 7,605 | |||||||||||||||||||||||||||
|
Foreign
Currency Translation
|
- | - | - | - | (123 | ) | - | (123 | ) | - | (123 | ) | ||||||||||||||||||||||||
|
Net
Income
|
- | - | - | - | - | (18,194 | ) | (18,194 | ) | 472 | (17,722 | ) | ||||||||||||||||||||||||
|
Balance,
September 30, 2010
|
7,444,931 | $ | 7 | $ | 61,175 | $ | (7,618 | ) | $ | (69 | ) | $ | (7,086 | ) | $ | 46,409 | $ | 0 | $ | 46,409 | ||||||||||||||||
See
Accompanying Notes to Consolidated Financial Statements.
F -
3
Consolidated
Statements of Cashflows
(In
Thousands)
|
Fiscal Year Ended September
30,
|
||||||||
|
2010
|
2009
|
|||||||
|
Cash
Flows Provided by Operating Activities
|
||||||||
|
Net
(Loss) Income
|
$ | (17,722 | ) | $ | 12,820 | |||
|
Adjustments
to Reconcile Net (Loss) Income to Net Cash Used in Operating
Activities:
|
||||||||
|
Bad
Debt Expense
|
- | 332 | ||||||
|
Depreciation
and Amortization
|
5,939 | 5,405 | ||||||
|
Amortization
of Stock-Based Compensation
|
7,605 | 1,375 | ||||||
|
Impairment
Loss
|
6,268 | - | ||||||
|
Changes
in Operating Assets and Liabilities:
|
||||||||
|
Accounts
Receivable
|
(1,721 | ) | (3,773 | ) | ||||
|
Deposits
for Inventoriable Assets
|
1,884 | (8,152 | ) | |||||
|
Other
Current Assets
|
191 | 525 | ||||||
|
Accounts
Payable and Accrued Liabilities
|
1,129 | 460 | ||||||
|
Net
Cash Provided by Operating Activities
|
3,573 | 8,992 | ||||||
|
Cash
Flows Used in Investing Activities
|
||||||||
|
Purchase
of Capitalized Software and Websites
|
(13,920 | ) | (5,960 | ) | ||||
|
Net
Cash Used in Investing Activities
|
(13,920 | ) | (5,960 | ) | ||||
|
Cash
Flows Provided by Financing Activities
|
||||||||
|
Proceeds
from Sales of Common Stock
|
- | 4,999 | ||||||
|
Net
Cash Provided by Financing Activities
|
- | 4,999 | ||||||
|
Cash
Flows Used in Discontinued Operations
|
||||||||
|
Changes
in Operating Assets and Liabilities:
|
||||||||
|
Assets
of Discontinued Operations
|
22,863 | (7,471 | ) | |||||
|
Liabilities
of Discontinued Operations
|
(5,275 | ) | (592 | ) | ||||
|
Net
Cash Provided by (Used in) Discontined Operations
|
17,588 | (8,063 | ) | |||||
|
Foreign
Currency Translation Adjustment
|
(123 | ) | (15 | ) | ||||
|
Increase
(Decrease) in Cash
|
7,118 | (47 | ) | |||||
|
Cash,
Beginning of Period
|
2 | 49 | ||||||
|
Cash,
End of Period
|
$ | 7,120 | $ | 2 | ||||
|
Supplemental
Disclosures of Cash Flow Information:
|
||||||||
|
Cash
Paid During the Period for:
|
||||||||
|
Interest
|
$ | - | $ | - | ||||
|
Income
Taxes
|
$ | - | $ | - | ||||
|
Supplemental
Schedule of Noncash Investing and Financing Activities:
|
||||||||
|
Issuance
of Stock for Services, Deferred Compensation
|
$ | 10,115 | $ | 1,180 | ||||
|
Issuance
of Stock for Acquisition of Websites and Related Assets
|
$ | 5,760 | $ | - | ||||
|
Adjustment
of Additional Paid-in-Capital and Noncontrolling Interests From Investment
in Subaye Inc, by Noncontrolling Interests
|
$ | 10,652 | $ | - | ||||
See
Accompanying Notes to Consolidated Financial Statements
F -
4